Friday, 16 March 2018

Is the council gambling with the city's future by putting more cash into the Smithfield hotel project?

Is Smithfield the unluckiest spot in the whole city? You could be forgiven for thinking so since it seems to attract more problems than is reasonable.

The new civic offices built there with huge controversy were beset with delays and problems with already costly building work having to be gone over more than once. Maybe the former owners of Hancock's pet shop or the Quartermasters Stores put a curse on the ground before they moved out.

If so it has struck again, the council have been obliged to top up their funding for the planned Hilton Garden Inn for the site by £2.3million before a brick has been laid. This comes on top of an initial investment of £4.55 million, taking their total stake to £6.8million.

There is also £9.8 million of private finance invested in the project, in 2016 the estimated total cost was £17.31million, this has now risen to £19.65million with the council having to pick up the shortfall or the cement mixers won't start to turn.

Additional costs have been imposed by extra work being needed to prepare the site, price increases by sub-contractors and 'inflationary pressures'.

The extra money will be taken from funds previously allocated to the council's housing company Fortitor Homes. A council spokesperson told the Sentinel this would not affect Fortitor's 'immediate investment plans and commitments', maybe so, but the thing about extra costs is that there is often no end to them once a project starts to slip off the rails.

Just how serious the consequences of this project going belly up could be are highlighted by the findings of a report published last week by the National Audit Office. They show that local authorities are struggling in the face of what Lord Porter, chair of the Local Government Association described as 'years of unprecedented funding reductions'.

The report, Financial Stability of Local Authorities 2018, not the snappiest of titles but the content is pretty spine chilling, sets out in deadpan official prose that challenges facing councils in the age of endless austerity.

Since 2010 government funding for local authorities has fallen by 49%, at the same time the demand for services like adult social care has grown. Councils have protected those services they have a statutory duty to provide, meaning others like housing and roads have been cut.

The government has announced multiple piecemeal initiatives aimed at helping councils fund services, most have been short term fixes with nothing like a long -term plan emerging. Now as budgets continue to tighten even statutory services are at risk of being cut.

Faced with the choice between a rock and a hard place councils are increasingly looking for other sources of income. For Stoke-on-Trent City Council that has meant trying to be nominated as the UK City of Culture for 2021, wooing Channel Four as they seek a base outside the capital and putting down a hefty chunk of cash on building a luxury hotel on the Smithfield site.

Some of these initiatives have their merits, the bid to be UK City of Culture although unsuccessful did bring an often-ignored city some much needed positive media coverage. There is an outside possibility that Channel Four could be persuaded to relocate to a city with a long tradition of creativity, although again it may be a case of promoting the good image of Stoke on the back of a near miss than winning the prize itself.

What worries me and anyone who has seen the slow unfolding of the mess that is Smithfield are the risks inherent in the Hilton Garden Inn project. The costs are already climbing and soon may outweigh the benefits brought by the fifty jobs it will create.

Five years ago, I joined hundreds of other local people as they marched in protest over building of the new Civic Centre, at the time this was a howl of outrage against a complacent Labour council who were out of touch with public opinion and, it seemed, reality. Their replacement by an Independent/Tory coalition was supposed to herald a new era of more responsive governance; there is little sign of that in this decision.

Local taxpayers have good reason to be sceptical about large capital projects, one of the two buildings on the Smithfield empty for a long period and the former bus station just up the road is still a crumbling ruin waiting to be turned into a shopping centre as a succession of developers turn up, promise to sort out the mess only to slip away in the night.

Speaking to the Sentinel last week a council spokesperson said, 'there is a clear need for a four- star hotel in the town centre to meet demand and allow us to compete on a national scale'. Whether that is really the case when the city has so many other needs is debatable, but it's clear that even if that is true if costs continue to rise the game may soon not be worth the candle.